Financial & Statistical Return Completion Guide

Transcription

1 Financial & Statistical Return Completion Guide DRAFT FOR COMMENT May 2017 BC C r ed i t Un i on s

2 Table of Contents 1. INTRODUCTION COMPLETION OF FSRS SUBMISSION OF FSRS MONTHLY FINANCIAL & STATISTICAL RETURN NON-CONSOLIDATED STATEMENT OF FINANCIAL POSITION (PAGE 1 OF FSR) CASH AND LIQUIDITY INVESTMENTS OTHER INVESTMENTS LOANS AND LEASES OTHER ASSETS NON-CONSOLIDATED STATEMENT OF FINANCIAL POSITION (PAGE 2 OF FSR) BORROWINGS DEPOSITS OTHER LIABILITIES CAPITAL NON-CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (PAGE 3 OF FSR) INTEREST INCOME INTEREST EXPENSE NON INTEREST INCOME NON INTEREST EXPENSES INCOME (LOSS) FROM EQUITY INVESTMENTS - 10% OR GREATER NON-CONSOLIDATED STATISTICS (PAGE 4 OF FSR) EQUITY INVESTMENTS LOANS AND LEASES IN ARREARS (including Lines of Credit) UNAUTHORIZED ADVANCES UNFUNDED LOANS AND LEASES NON-CONSOLIDATED STATISTICS (PAGE 5 OF FSR) ALLOWANCE FOR IMPAIRMENT LOANS AND LEASES STATEMENT OF OTHER COMPREHENSIVE INCOME (LOSS) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) NON-CONSOLIDATED STATISTICS (PAGE 6 OF FSR) CAPITAL... 50

3 OFF BALANCE SHEET ASSETS UNDER ADMINISTRATION LOANS DEPOSITS OTHER BORROWING FACILITIES ($) OTHER STATISTICS QUARTERLY FINANCIAL & STATISTICAL RETURN COMMERCIAL LOAN RISK RATING LOAN PORTFOLIO DETAIL INDUSTRY & RESTRICTED INTEREST RATE RISK ANNUAL FINANCIAL & STATISTICAL RETURN APPENDIX I... 68

4 1. INTRODUCTION Central 1 Credit Union, Stabilization Central Credit Union (SCCU), and the Financial Institutions Commission (FICOM) have developed a common data base, designed to meet the information needs of the three organizations and to enable the provision of relevant financial performance information to credit unions. As part of this ongoing project and in order to meet the needs of British Columbia's regulatory requirements under the Financial Institutions Act, the following information Returns (FSRs) were developed for British Columbia Credit Unions: 1. Monthly Financial & Statistical Return 2. Quarterly Financial & Statistical Return 3. Annual Financial & Statistical Return These FSRs were developed to satisfy the following key objectives: facilitate effective monitoring of statutory compliance and risk; permit the calculation of a credit union's Capital Adequacy and Liquidity positions; facilitate the sharing of FSR data and information between Central 1 Credit Union, SCCU, FICOM, and credit unions; facilitate improved feedback to credit unions regarding their financial position and performance; provide a sound framework to allow continued development and delivery of effective monitoring and comparative performance measurement applications, including the Comparative Analysis Report (CAR), to Central 1 Credit Union, SCCU, FICOM, and credit unions; and facilitate the electronic capture and transfer of credit union financial data and information for the benefit of credit unions and our three organizations in terms of efficiency and data integrity. This guide has been updated based on the significant changes made to the Monthly and Annual Financial & Statistical Returns. In addition, account classification reminders have been added where appropriate to assist with the proper completion of the FSRs. As issues not covered in the guide arise, bulletins will be issued discussing appropriate reporting treatment for any of the FSRs. The purpose of this guide is to assist credit unions in the completion of the FSRs. While the user of this guide is expected to have a sufficient working knowledge of accounting practices, international financial reporting standards, capital adequacy and credit union services, the guide makes reference to other sources of information or provides examples where completion of specific parts of the FSRs are considered to be difficult or require a higher level of expertise. The guide specifies the required reporting frequency of the FSRs and a line by line description of each classification in the same numeric sequence as on the FSRs. Copies of the prescribed FSRs are also provided at the back of this guide. Page 1

5 1.1. COMPLETION OF FSRS The FSRs must be based on the non-consolidated financial statements of the credit union prepared in accordance with International Financial Reporting Standards (IFRS), reflecting book values at the date of the FSRs unless otherwise specified. All FSR data is to be entered by authorized credit union staff using the data entry program on FICOM s secured Credit Union Industry Website. For information on the data entry program, please refer to your Financial & Statistical Return Data Entry System User Manual. All dollar figures must be reported in Canadian dollars (i.e., US dollar and Other Foreign currency accounts must be converted to the Canadian dollar equivalent at the date of the FSR). At the beginning of the new fiscal year, all Statement of Comprehensive Income items from the prior fiscal year must be closed out SUBMISSION OF FSRS The completed FSRs must be submitted electronically by authorized credit union staff on FICOM s secured Credit Union Industry Website. DUE: Monthly:* Quarterly: Annual:* Within 20 days after month end. Within 20 days after appropriate quarter end (March, June, September, December) Within 90 days after fiscal year end. *Please note that two FSRs are to be submitted for your credit union's year end: - Monthly Financial & Statistical (unaudited year end) - Annual Financial & Statistical (unaudited year end). This FSR is the same as the Monthly Financial & Statistical Return except the figures and information reported are based on the year end non-consolidated financial statements. Please note that this FSR does not have to be approved or signed by your Auditor. LATE: Please ensure that FICOM is notified as soon as possible of any expected delays in FSR submission. Please note that any credit union filing the FSRs late may be subject to a penalty. To learn more about the Non-Compliant Filings Administrative Penalty (NFAP) Guideline, go to the FICOM website. QUERIES: Contact FICOM Filings@ficombc.ca Telephone: Facsimile: Page 2

6 2. MONTHLY FINANCIAL & STATISTICAL RETURN 2.1. NON-CONSOLIDATED STATEMENT OF FINANCIAL POSITION (PAGE 1 OF FSR) CASH AND LIQUIDITY INVESTMENTS 1010 Cash All cash on hand (cash that is physically on the premises of the credit union), cash in transit, cash in ATMs and any foreign currency held, valued at the current exchange rate Central 1 Credit Union: Operating Account Central 1 Credit Union Operating Account net of manager's chequing account(s) and other related clearing account(s) administered in the member chequing sub-ledger, or other general ledger accounts, where net result is a deposit balance (debit). Reminder: When in a negative or credit balance, classify on Line 2010, BORROWINGS: Central 1 Credit Union: Operating Account Central 1 Credit Union: Deposits All Central 1 Credit Union deposits except Central 1 Credit Union: Operating Account (Line 1020). Reminder: Central 1 Credit Union Equity Shares must be reported on Line 1110, OTHER INVESTMENTS: Equity Shares Credit Union Centrals Central 1 Credit Union: Deposits [100 Days or Less] Central 1 Credit Union deposits, included on Line 1030, which are repayable on 100 days notice or less or have a term to maturity of 100 days or less Guaranteed Security Instruments The principal amount of any federal, provincial and municipal securities, including Treasury Bills and marketable bonds held by the credit union, debt securities of crown corporations and other government entities that are guaranteed unconditionally as to principal and interest. Also, the guaranteed portion (10%) of GrowthStart Fund is to be reported here. Reminder: Municipal securities do not include credit union loans to municipalities. Loans to municipalities must be reported on Line 1270, LOANS AND LEASES: Commercial Unsecured: Governments & Municipalities. Securitized assets originated by your credit union that have been determined to be a financing under IFRS, but do not meet IFRS de-recognition criteria and for which proceeds have been received from investors or being held pending purchase by investors are to be reported on the appropriate Lines 1286 to 1289, LOANS AND LEASES: Securitizations. Page 3

7 Non-securitized assets originated by your credit union that have been determined to be a financing under IFRS but do not meet IFRS de-recognition criteria and for which proceeds have been received from investors or being held pending purchase by investors are to be reported on the appropriate Lines 1150 to 1280, LOANS AND LEASES Deposits with Deposit Taking Institutions All demand and term deposits that are on deposit with a deposit taking institution or central bank, and a federally or provincially chartered trust company. Do not include deposits in Central 1 Credit Union here (see Lines 1020, 1030 and 1110) Deposits with Deposit Taking Institutions [100 Days or Less] Deposits with Deposit Taking Institutions, included on Line 1050, which are repayable on 100 days notice or less or have a term to maturity of 100 days or less Debt Security Instruments Any debt security instruments, other than subordinated debt security instruments, issued or guaranteed by a bank, a financial institution, or an extraprovincial corporation e.g. Bankers' Acceptances, guaranteed commercial paper and loans to banks, financial institutions or extraprovincial corporations Debt Security Instruments [1 Year or Less] Debt Security Instruments, included on Line 1060, which have a term to maturity of 1 year or less Non-Guaranteed Commercial Paper: AAA to AA (low) or R1 high) Any non-guaranteed corporate commercial paper rated AAA to AA (low) or R1 (high) by the Dominion Bond Rating Service or a comparable rating by another major rating agency Non-Guaranteed Commercial Paper: A (high) to A (low) or R1 (middle) Any non-guaranteed corporate commercial paper rated A (high) to A (low) or R1 (middle) by the Dominion Bond Rating Service or a comparable rating by another major rating agency Non-Guaranteed Commercial Paper: BBB (high) to BB (low) or R1 (low) to R2 (low) Any non-guaranteed corporate commercial paper rated BBB (high) to BB (low) or R1 (low) to R2 (low) by the Dominion Bond Rating Service or a comparable rating by another major rating agency. This line also includes unrated corporate commercial paper Non-Guaranteed Commercial Paper: Below BB (low) or Below R2 (low) Any non-guaranteed corporate commercial paper rated Below BB (low) or Below R2 (low) or below by the Dominion Bond Rating Service or a comparable rating by another major rating agency Page 4

8 1075 Securities Secured by Mortgages: Guaranteed by CMHC Investment in securities that are secured by mortgages and guaranteed by the Canada Mortgage and Housing Corporation (CMHC), including the National Housing Act Mortgage-Backed Securities (NHA-MBS) and Canada Mortgage Bonds (CMB). Reminder: Securitized mortgages originated by your credit union, that do not qualify for derecognition under IFRS, must be reported on the appropriate Lines , LOANS AND LEASES: Securitizations: Personal or Commercial Insured or Non- Insured Securities Secured by Mortgages: Other Investment in securities that are secured by mortgages and not guaranteed by the CMHC. Reminder: Securitized mortgages originated by your credit union, that do not qualify for derecognition under IFRS, must be reported on the appropriate Lines , LOANS AND LEASES: Securitizations: Personal or Commercial Insured or Non- Insured Other Include the non-guaranteed portion (90%) of GrowthStart Fund (i.e. Communities First Investment Fund) investment, and liquidity investments not included on Lines 1020 to Reminder: Guaranteed portion (10%) of GrowthStart Fund is to be reported on Line 1040, Guaranteed Security Instruments Accrued Interest on Above Items Accrued interest on liquidity investments included on Lines 1020, 1030, 1040, 1050, 1060, 1070, 1071, 1072, 1073, 1075, 1078, and Reminder: Accruals for derivative contracts (i.e., swaps) are not to be included here. Accruals for derivative contracts must be netted and, if a net asset, include on Line 1407, OTHER ASSETS: Derivative Financial Instruments. A net liability must be included on Line 2186, OTHER LIABILITIES: Derivative Financial Instruments Allowance for Impairment Allowance for expected credit losses on liquidity investments (Lines 1040, 1050, 1060, 1070, 1071, 1072, 1073, 1075, 1078, and 1080). Any loss provision on Property Acquired in Settlement of Loans and Leases or Property Held for Investments are to be netted on Lines 1350 and 1360, respectively CASH AND LIQUIDITY INVESTMENTS The sum of Lines 1010, 1020, 1030, 1040, 1050, 1060, 1070, 1071, 1072, 1073, 1075, 1078, 1080, 1090, and Page 5

9 OTHER INVESTMENTS 1110 Equity Shares Credit Union Centrals The principal investment in Equity Shares of Central 1 Credit Union and SCCU CUDIC Debentures The principal investment in Credit Union Deposit Insurance Corporation of B.C. (CUDIC) debentures Accrued Interest & Dividends on Other Investments Accrued interest & dividends on Equity Shares Credit Union Centrals (Line 1110) and CUDIC Debentures (Line 1120). Reminder: The value of this Line must include accruals for CUDIC Debenture interest and Central 1 Credit Union Equity Share Dividends. If interest or dividends are prepaid by either Central 1 Credit Union or CUDIC, the prepaid amount must be treated as deferred income and included on Line 2188, OTHER LIABILITIES: Other. Income must be reported on Line 3020, INTEREST INCOME: Other Investments OTHER INVESTMENTS The sum of Lines 1110 to LOANS AND LEASES The definition and classification of loans is developed to be consistent with the Capital Requirements Regulation and standard loan classification of the model Investment and Lending Policy. DEFINITIONS: "Commercial Loan" means: a) a loan to an individual: (i) to finance commercial activity or a commercial investment, or (ii) dependent on commercial sources for its repayment, other than a loan for the purchase of securities or for the operation of a small business so long as the debt can be serviced from independent employment income, b) a loan to an entity, partnership or joint venture for any purpose, or c) accounts receivable acquired in the course of factoring, but does not include: d) a residential mortgage, e) a farm mortgage, f) a loan that under Capital Requirements Regulation 5(1)(b) must be deducted from the capital base of the lender if the lender is a credit union, or Page 6

10 g) loans itemized in items 10 to 14 in Column 1 in the Table of On Balance Sheet Items contained in the Capital Requirements Regulation. Please note that these loans are to be reported as Commercial - Real Estate Secured: Insured on Line 1210, Commercial - Otherwise Secured: Fully Secured by Dep. & Gov t. Sec. on Line 1250 or Commercial - Unsecured: Governments & Municipalities on Line Loans reported on Lines 1210, 1250 and 1270 are not included in this definition of Commercial Loans as they are eligible for a 0 risk weighting when calculating the Capital Adequacy position. However, they are reported on these Lines for consistency with the classification under the Commercial Lending Section of the Investment and Lending Policy. "Commercial Lease" means: a) a lease made to an individual for a commercial activity, or b) a lease made to an entity, partnership or joint venture for any purpose. "Residential Mortgage" means: a loan to an individual secured by a mortgage on land or on the lessee's interest in a lease of land on which land, in either case, there are one or more buildings that are used or will be used, to the extent of at least 80% of the floor space, for residential purposes and: a) that are owner occupied or are intended to be owner occupied and are ready for occupancy, b) that are under construction and are intended to be occupied by the borrower on completion, or c) that are residential rental dwellings, consisting of not more than four units, ready for occupancy and includes d) a loan to an individual secured by a mortgage on a hobby farm or a recreational property or on the lessee's interest in a lease on either. "Farm Mortgage" means: a loan secured by a mortgage on farm land, owned by an individual who is a farmer whose residence is on the land. "Personal Loans" include: a) residential mortgages as defined, b) farm mortgages as defined, and c) loans to individuals, and not corporations for the purchase of securities or operation of business so long as the debt can be serviced from independent employment income. "Personal Lease" means: a lease made to an individual for non-commercial purposes. Also, note that the following items must be included in the appropriate Loan and Lease Classification (Lines 1150 to 1280): a) Agreements for Sale, b) Loans and leases (not originated by your credit union) purchased without recourse in a regular way purchase / sale transaction, and Page 7

11 c) Loans to Subsidiaries, 10% or Greater Ownership or loans to corporations where the credit union has an ownership interest (Lines 1210 to 1280) Personal - Real Estate Secured: Insured Residential Mortgage loans and Lines of Credit fully secured by mortgages on land that are approved or insured under the National Housing Act (Canada), or an insurer authorized to conduct mortgage insurance business under the Act to the extent that such loans are guaranteed by the Government of Canada. Include CMHC insured loans granted under the British Columbia Home Mortgage Assistance Program (MAP) and CMHC insured manufactured home loans. Please note that Lines of Credit reported on Line 1155 below must also be included on this Line. Also, note that Genworth insured loans are 90% guaranteed by the federal government under the Government Guarantee Agreement. Therefore, 10% of loans not guaranteed should be included on Line 1160 or 1170, depending on the Loan to FMV % Personal - Real Estate Secured: Insured [Lines of Credit] The outstanding balance of Lines of Credit included on Line Personal - Real Estate Secured: Residential - 75% of FMV or Less Uninsured Residential Mortgage loans, including any eligible Farm Mortgage loans, where the outstanding balance on each loan is 75% or less of the Fair Market Value (FMV) of the property. Also, include uninsured Residential Mortgage secured Lines of Credit where the authorized limit on each Line of Credit is 75% or less of the FMV of the property. The valuation is based on the FMV at the date of the mortgage and must be supported by an appraisal or other objective evidence of value. The FMV may only be adjusted when a new mortgage is taken on the property. If a second mortgage is taken, the FMV of the mortgage at the date of the second mortgage applies. Adjustment of the FMV is permitted as long as a new appraisal or appropriate proof of current FMV is obtained at the time of mortgage renewals, mortgage blend and extend and re-advanceable mortgages. Include certificate of title loans, uninsured loans granted under the British Columbia Home Mortgage Assistance Plan (MAP) and interim construction mortgage financing, which qualify under the definition of a Residential Mortgage, on residential property where the outstanding balance is 75% or less of the FMV of the property. Please note that Lines of Credit reported on Line 1165 below must also be included on this Line Personal - Real Estate Secured: Residential - 75% of FMV or Less [Lines of Credit] The outstanding balance of Lines of Credit included on Line Personal - Real Estate Secured: Residential - Greater than 75% of FMV Uninsured Residential Mortgage loans, including any eligible Farm Mortgage loans, where the outstanding balance on each loan exceeds 75% of the FMV. Also, include uninsured Residential Mortgage Lines of Credit where the authorized limit on each Line of Credit exceeds 75% of the Page 8

12 FMV. FMV is based on the value of the property at the date of the mortgage and must be supported by an appraisal or other objective evidence of value. Adjustment of the FMV is permitted as long as a new appraisal or appropriate proof of current FMV is obtained at the time of mortgage renewals, mortgage blend and extend and re-advanceable mortgages. If the sum of any prior or equally ranking encumbrances on the property, such as a first mortgage or lien, plus the amount of an uninsured loan exceeds 75% of the FMV of the property, the entire uninsured loan must be included in this category. Mortgages included in this category can be transferred to Line 1160 once the outstanding balance is reduced below 75% of the mortgage date FMV. Include certificate of title loans, uninsured loans granted under the British Columbia Home Mortgage Assistance Plan (MAP) and interim construction mortgage financing, which qualifies under the definition of a Residential Mortgage, on residential property where the outstanding balance is greater than 75% of the FMV of the property. Please note that Lines of Credit reported on Line 1175 below must also be included on this Line Personal - Real Estate Secured: Residential - Greater than 75% of FMV [Lines of Credit] The outstanding balance of Lines of Credit included on Line Personal - Otherwise Secured: Fully Secured by Deposits & Government Securities Personal Loans and Lines of Credit which are: fully secured by pledged credit union deposits and non-equity shares* fully secured by pledged bank deposits* fully secured by pledged government securities* guaranteed by the Government of Canada, by a Province, by a Municipality or by the Central Government of an OECD country to the extent the loans are guaranteed. *should be registered under the Personal Property Security Act (PPSA). Also, the guaranteed portion of Canada Student Loans would be included on this Line. Please note that Lines of Credit reported on Line 1185 below must also be included on this Line. Reminder: The portion of Canada Student Loans which are not guaranteed by the Federal Government must be included on Line 1200, Personal - Unsecured: All Personal - Otherwise Secured: Fully Secured by Deposits & Government Securities [Lines of Credit] The outstanding balance of Lines of Credit included on Line Personal - Otherwise Secured: Leases Personal Leases are recorded on this Line. A Personal Lease means a lease made to an individual for non-commercial purposes. Page 9

13 1190 Personal - Otherwise Secured: All Others All other Personal Loans and Lines of Credit which are otherwise secured, excluding Personal Leases, which are reported on Line This would include Personal Loans secured under the Personal Property Security Act (PPSA) which do not qualify under Line Please note that Lines of Credit reported on Line 1195 below must also be included on this Line Personal - Otherwise Secured: All Others [Lines of Credit] The outstanding balance of Lines of Credit included on Line Personal - Unsecured: All All other unsecured Personal Loans, Lines of Credit and all personal overdrafts, including the non-guaranteed portion of Canada Student Loans. Please note that Lines of Credit reported on Line 1205 below must also be included on this Line. Reminder: The portion of Canada Student Loans which are guaranteed by the Federal Government must be included on Line 1180, Personal - Otherwise Secured: Fully Secured by Deposits & Government Securities Personal - Unsecured: All [Lines of Credit] The outstanding balance of Lines of Credit included on Line Please note that outstanding personal credit card account balances are to be included here. Reminder: Personal overdrafts must be reported on Line 1200, Personal - Unsecured: All Commercial - Real Estate Secured: Insured Commercial mortgage loans and Lines of Credit fully secured by mortgages on real estate that are insured under the National Housing Act (Canada) or an insurer authorized to conduct mortgage insurance business under the Act. Please note that Lines of Credit reported on Line 1215 below must also be included on this Line Commercial - Real Estate Secured: Insured [Lines of Credit] The outstanding balance of Lines of Credit included on Line Commercial - Real Estate Secured: Residential Uninsured commercial mortgage loans and Lines of Credit on residential property not qualifying as a Residential Mortgage. Please note that Lines of Credit reported on Line 1225 below must also be included on this Line Commercial - Real Estate Secured: Residential [Lines of Credit] The outstanding balance of Lines of Credit included on Line Page 10

14 1230 Commercial - Real Estate Secured: Progressive Draws / Interim Financing This line includes all progressive draws / interim financing, including construction mortgage, which is not eligible for classification as a Residential Mortgage. Interim construction mortgage financing, eligible as a Residential Mortgage, is to be included in the appropriate Personal - Real Estate Secured: Residential Loan Classification (Line 1160 or 1170). Please note that Lines of Credit reported on Line 1235 below must also be included on this Line Commercial - Real Estate Secured: Progressive Draws / Interim Financing [Lines of Credit] The outstanding balance of Lines of Credit included on Line Commercial - Real Estate Secured: All Others All other Commercial Loans and Lines of Credit secured by a mortgage on real estate, including the certificate of title loans and non-guaranteed portion of Business Improvement Loans (Real Estate Secured) under the Small Business Loans Act. Please note that Lines of Credit reported on Line 1245 below must also be included on this Line Commercial - Real Estate Secured: All Others [Lines of Credit] The outstanding balance of Lines of Credit included on Line Commercial - Otherwise Secured: Fully Secured by Deposits & Government Securities Commercial Loans and Lines of Credit which are: fully secured by pledged credit union deposits and non-equity shares fully secured by pledged bank deposits fully secured by pledged government securities guaranteed by the Government of Canada, by a Province, by a Municipality, or by the Central Government of an OECD country to the extent the loans are guaranteed. The guaranteed portion of Business Improvement Loans under the Small Business Loans Act must be included here. (These loans are guaranteed to a limited extent and individual credit unions will have to calculate the guaranteed and non-guaranteed portions of their Small Business Loan portfolio.) Please note that Lines of Credit reported on Line 1255 below must also be included on this Line Commercial - Otherwise Secured: Fully Secured by Deposits & Government Securities [Lines of Credit] The outstanding balance of Lines of Credit included on Line Page 11

15 1257 Commercial - Otherwise Secured: Leases Commercial Leases are recorded on this line. A Commercial Lease means a lease made to an individual for a commercial activity, or a lease made to an entity, partnership or joint partnership for any purpose Commercial - Otherwise Secured: All Others All other Commercial Loans and Lines of Credit which are otherwise secured, excluding commercial leases, which are reported on Line This would include all commercial loans secured under the Personal Property Security Act (PPSA) and the non-guaranteed portion of Business Improvement Loans (Otherwise Secured) under the Small Business Loans Act. Please note that Lines of Credit reported on Line 1265 below must also be included on this Line Commercial - Otherwise Secured: All Others [Lines of Credit] The outstanding balance of Lines of Credit included on Line Commercial - Unsecured: Governments & Municipalities Commercial Loans and Lines of Credit to the federal or provincial governments and municipalities. Please note that Lines of Credit reported on Line 1275 below must also be included on this Line Commercial - Unsecured: Governments & Municipalities [Lines of Credit] The outstanding balance of Lines of Credit included on Line Commercial - Unsecured: All Others All other unsecured Commercial Loans, Lines of Credit and all commercial overdrafts. Please note that Lines of Credit reported on Line 1285 below must also be included on this Line Commercial - Unsecured: All Others [Lines of Credit] The outstanding balance of Lines of Credit included on Line Please note that outstanding commercial credit card account balances are to be included here. Reminder: All commercial overdrafts must be reported on Line 1280, Commercial - Unsecured: All Others Securitizations: Personal Insured Personal Insured securitizations originated by your credit union that have been determined to be a financing under IFRS but do not meet IFRS de-recognition criteria and for which proceeds from investors have been received. Includes insured personal loans securitized under NHA-MBS / CMB and other programs. Reminder: Personal insured securitizations originated by your credit union that have been determined to be a financing under IFRS but do not meet IFRS de-recognition Page 12

16 criteria and being held pending purchase by investors are to be included on this Line Securitizations: Commercial Insured Commercial Insured securitizations originated by your credit union that have been determined to be a financing under IFRS but do not meet IFRS de-recognition criteria and for which proceeds from investors have been received. Includes insured commercial loans securitized under NHA-MBS / CMB and other programs. Reminder: Commercial insured securitizations originated by your credit union that have been determined to be a financing under IFRS but do not meet IFRS de-recognition criteria and being held pending purchase by investors are to be included on this Line Securitizations: Personal Non-Insured Personal Non-Insured securitizations originated by your credit union that have been determined to be a financing under IFRS but do not meet IFRS de-recognition criteria and for which proceeds from investors have been received. Includes non-insured securitized personal loans and leases. Please note that securitized personal leases reported on Line 1298 below must also be included on this Line. Reminder: Personal non-insured securitizations originated by your credit union that have been determined to be a financing under IFRS but do not meet IFRS de-recognition criteria and being held pending purchase by investors are to be included on this Line Securitizations: Personal Non-Insured [Leases] The outstanding balance of personal securitized leases included on Line Securitizations: Commercial Non-Insured Commercial Non-Insured securitizations originated by your credit union that have been determined to be a financing under IFRS but do not meet IFRS de-recognition criteria and for which proceeds from investors have been received. Includes non-insured securitized commercial loans and leases. Please note that securitized commercial leases reported on Line 1299 below must also be included on this Line. Reminder: Commercial non-insured securitizations originated by your credit union that have been determined to be a financing under IFRS but do not meet IFRS derecognition criteria and being held pending purchase by investors are to be included on this Line Securitizations: Commercial Non-Insured [Leases] The outstanding balance of commercial securitized leases included on Line Page 13

17 1290 Accrued Interest Includes accrued interest on all loans, leases, and securitizations from Lines 1150 to Allowance for Impairment: Personal Provisions for losses on Personal Loans, Personal Leases, and Securitizations - Personal (Insured and Non-Insured), (Lines 1150, 1160, 1170, 1180, 1187, 1190, 1200, 1287, and 1288) including both collective and specific allowances. Any loss provisions on Property Acquired in Settlement of Loans and Leases or Property Held for Investments are to be netted on Lines 1350 and 1360, respectively. Reminder: This Line must equal the amount reported on Line 4640, ALLOWANCE FOR IMPAIRMENT LOANS AND LEASES: Total Personal: Ending Balance Allowance for Impairment: Personal [Specific] Specific provisions for losses on Personal Loans, Personal Leases, and Securitizations - Personal (Insured and Non-Insured). The outstanding balance of Line 1305 is included on Line Allowance for Impairment: Commercial Provisions for losses on Commercial Loans, Commercial Leases, and Securitizations - Commercial (Insured and Non-Insured) (Lines 1210, 1220, 1230, 1240, 1250, 1257, 1260, 1270, 1280, 1286, and 1289) including both collective and specific allowances. Any losses on Property Acquired in Settlement of Loans and Leases or Property Held for Investments are to be netted on Lines 1350 and 1360, respectively. Reminder: This Line must equal the amount reported on Line 4690, ALLOWANCE FOR IMPAIRMENT LOANS AND LEASES: Total Commercial: Ending Balance Allowance for Impairment: Commercial [Specific] Specific provisions for losses on Commercial Loans, Commercial Leases, and Securitizations - Commercial (Insured and Non-Insured). The outstanding balance of Line 1315 is included on Line LOANS AND LEASES The sum of Lines 1150, 1160, 1170, 1180, 1187, 1190, 1200, 1210, 1220, 1230, 1240, 1250, 1257, 1260, 1270, 1280, 1286, 1287, 1288, 1289, 1290, 1300 and OTHER ASSETS 1330 Premises & Equipment - Net Net book value, after accumulated depreciation / amortization, of credit union s property, plant and equipment such as land, buildings, leasehold improvements, furniture & equipment Page 14

18 (computer & non-computer), automobiles, ATM s (owned or leased), etc. Please note that rightof-use assets reported on Line 1335 below must also be included on this Line Premises & Equipment - Net [Right-of-Use Assets] Net book value, after accumulated depreciation / amortization and impairment, of credit union s right-of-use assets representing the right to use the underlying leased property, plant and equipment for the lease term. The outstanding balance of Line 1335 is included on Line Reminder: Report associated liability for lease payments on Line 2189, OTHER LIABILITIES: Lease Liability. Please Note: This Line was added to comply with changes introduced by IFRS 16: Leases. As IFRS 16 is effective for annual periods beginning on or after January 1, 2019, please report this Line starting January Property Acquired in Settlement of Loans and Leases - Net Property, including land, buildings, vehicles, and any other property acquired in settlement or partial settlement of loans and leases and held for less than 7 years, net of any allowance for property losses and accumulated depreciation / amortization. Property held for more than 7 years is to be included on Line 1360, Property Held for Investments, net of any allowance for property losses and accumulated depreciation / amortization. Reminder: Do not include allowances for loans which are expected to be transferred to Property Acquired in Settlement of Loans and Leases but are still reported in Loans and Leases. Continue to report the appropriate allowances on Lines 1300 and 1310 until the transfer from Loans and Leases to Property Acquired in Settlement of Loans and Leases has been made Property Held for Investments - Net Property, including land and buildings, acquired for investment purposes or acquired in settlement of loans and leases and held for more than 7 years, net of any allowance for property losses and accumulated depreciation / amortization. Please note that right-of-use assets reported on Line 1365 below must also be included on this Line. Reminder: Gains (losses) on the disposal of Property Held for Investments are to be reported on Line 3480, Capital Gain (Loss) Property Held for Investments - Net [Right-of-Use Assets] Right-of-use assets representing the right to use the underlying leased investment property, including land and buildings, for the lease term, net of any allowance for property losses and accumulated depreciation / amortization. The outstanding balance of Line 1365 is included on Line Reminder: Report associated liability for lease payments on Line 2189, OTHER LIABILITIES: Lease Liability. Page 15

19 Please Note: This Line was added to comply with changes introduced by IFRS 16: Leases. As IFRS 16 is effective for annual periods beginning on or after January 1, 2019, please report this Line starting January Equity Investments: Less Than 10% Ownership Equity Investments, using the cost basis of accounting, in corporations where credit union ownership and control is less than 10%, i.e., shares in CUCO, CUPP etc. Also, include investment in Credential Securities Inc. (national credit union brokerage corporation) Equity Investments: 10% or Greater Ownership Equity Investments, as calculated using the Equity Method of Accounting, for each investment of the credit union representing 10% or greater share of ownership or control in a corporation other than a corporation that carries on the business of: i. banking; ii. insurance business (other than an insurance agent or insurance adjuster); iii. trust business, deposit business, or both; iv. broker, underwriter, or dealer in securities. If such investments are valued on the books of the credit union using the Equity Method of Accounting, then no adjustment is necessary. However, FICOM requires the losses of investment in subsidiary to continue to be recognized in Line 1380 as if the investment and credit union as presented as a single economic entity. According to the Financial Institutions Act, a credit union must calculate an investment in the shares of a subsidiary using the Equity Method of Accounting described in this guide. Under the Equity Method of Accounting, the credit union initially records its investment in the subsidiary at the original cost of the investment. The recorded value of the investment is then adjusted to include the credit union s pro-rata share of the net income earned (or losses incurred) by the subsidiary since the date of the acquisition, less goodwill and other intangible assets impairment / amortization expense, and less dividends received from the subsidiary. Credit unions with investments in subsidiaries are required to ensure that all asset and liability values of subsidiaries are determined in accordance with international financial reporting standards for each reporting period and that any impairment in values is properly reflected in investment carrying values. Page 16

20 ACQUISITION COST ADD: Post acquisition pro-rata share of net income (loss) including other impairment losses of the subsidiary at the reporting date LESS: Goodwill and other intangible assets Impairment / amortization expense LESS: Dividends received from subsidiary VALUE OF INVESTMENT IN SUBSIDIARY $XXX XXX (XXX) (XXX) $XXX Reminder: This Line must equal to the amount reported on Line 4100, VALUE OF EQUITY INVESTMENT. Please refer to the description of Lines 4010 to 4100 in the EQUITY INVESTMENTS section of this guide for further details. Amounts funded by the credit union to its subsidiaries by way of a loan are not to be included here but are to be included in the appropriate Commercial Loan Category (Lines 1210 to 1280) Deferred Income Tax Debits Deferred Income Tax debits resulting from differences between taxable and accounting income. Reminder: If the net result of deferred income tax is a credit position, it must be reported on Line 2240, Deferred Income Tax Credits Derivative Financial Instruments Includes FMV adjustments of swaps, unrealized gains, (losses are to be offset against gains only as permitted by IFRS), accrued receivables on foreign exchange and interest rate-related offbalance sheet transactions, accruals for derivative contracts which result in a net receivable, deferred losses on hedging instruments, margin requirements, and premiums paid. Reminder: Accruals for derivative contracts (i.e., swaps) which result in a net payable must be included on Line 2186, OTHER LIABILITIES: Derivative Financial Instruments. According to International Accounting Standards (IAS) 32: Financial Instruments: Presentation: A financial asset and a financial liability shall be offset and the net amount presented in the statement of financial position when, and only when, an entity: (a) currently has a legally enforceable right to set off the recognised amounts; and (b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets recognized on the books of the credit union. Page 17

21 An example of Goodwill on the books of the credit union would be a credit union purchasing branch business from a bank at a premium over the carrying value of the business purchased. An example of Other Intangible Assets on the books of the credit union would be computer software. Please note that right-of-use assets reported on Line 1409 below must also be included on this Line. Reminder: This Line may not be the same as Line 6300, Goodwill and Other Intangible Assets for Deductions from Capital, as Line 6300 also includes any Goodwill and Other Intangible Assets recognized on the books of the credit union s subsidiaries Other Intangible Assets [Right-of-Use Assets] Right-of-use assets on the books of the credit union representing the right to use the underlying leased intangible assets for the lease term, net of any impairment and accumulated amortization. The outstanding balance of Line 1409 is included on Line Reminder: Report associated liability for lease payments on Line 2189, OTHER LIABILITIES: Lease Liability. Please Note: This Line was added to comply with changes introduced by IFRS 16: Leases. As IFRS 16 is effective for annual periods beginning on or after January 1, 2019, please report this Line starting January All Other Assets All remaining assets at book value, e.g. prepaid expenses, accounts receivable, cash shortages, current income taxes receivable, etc. Reminder: If prepaid expenses, receivables, etc. are in a net credit position, please review the individual account. All accounts in a credit position are to be reported on Line 2190, OTHER LIABILITIES OTHER ASSETS The sum of Lines 1330 to TOTAL ASSETS The sum of Lines 1100, 1140, 1320, and Page 18

22 2.2. NON-CONSOLIDATED STATEMENT OF FINANCIAL POSITION (PAGE 2 OF FSR) BORROWINGS 2010 Central 1 Credit Union: Operating Account Central 1 Credit Union operating accounts (U.S. and CDN) net of manager's chequing account(s) and other related clearing account(s) administered in the member chequing sub-ledger or other general ledger accounts where net result is a borrowing balance (credit). Reminder: When in a debit balance, classify on Line 1020, CASH AND LIQUIDITY INVESTMENTS: Central 1 Credit Union: Operating Account Central 1 Credit Union: Term All Term borrowings from Central 1 Credit Union, excluding Central 1 Credit Union Operating Account borrowings which is classified on Line Please note that any Central 1 Credit Union Specified Term Borrowing outstanding balances on Line 2025 below must be included on this Line Central 1 Credit Union: Term [Specified] Specified borrowings from Central 1 Credit Union (debt obligations that have a term to maturity when issued of not more than 7 days and are borrowed to meet short term requirements for liquid funds) are reported here and included on Line Securitizations Borrowings for Securitization transactions that have been determined to be a financing under IFRS are reported here. Please note that any NHA-MBS / CMB securitizations outstanding balances on Line 2028 below must be included on this Line Securitizations [NHA MBS / CMB] All National Housing Act Mortgage Backed Securities (NHA-MBS) and Canadian Mortgage Bonds (CMB) securitization transactions are reported here and included on Line 2027, BORROWINGS: Securitizations Other All non-central 1 Credit Union borrowings such as chartered bank loans, mortgages payable, government loans, and any other loans payable. Please note that any Other Specified Borrowings outstanding balances on Line 2035 below are to be included on this Line. Reminder: Securitization Borrowings for Securitization transactions determined to be a financing are to be reported on Line 2027, BORROWINGS: Securitizations. Page 19

23 2035 Other [Specified] The outstanding balance of any specified borrowings (debt obligations that are repayable on demand or have a term to maturity when issued of not more than 7 days and are borrowed to meet short term requirements for liquid funds) are reported here and included on Line Accrued Interest on Borrowings Accrued interest on borrowings included on Lines 2010 to Reminder: This value is often reported as zero when non-zero amounts are reported on any of Lines 2010, 2020, 2027, and If any amounts are reported on Lines 2010, 2020, 2027, and 2030, then this Line must be non-zero unless interest is paid up at month end. Please ensure that accruals for borrowings are included here and that the associated expense is reported on Lines 3140, 3150, 3157, and BORROWINGS The sum of Lines 2010, 2020, 2027, 2030, and DEPOSITS 2060 Demand: Chequing Demand chequing deposits where: a) interest is calculated based on an established minimum dollar balance and period of time (i.e., minimum half-yearly balance of $100). Interest is generally minimal or NIL and is applied on an untiered basis. This type of account is commonly known as a "Basic" chequing account. b) interest is calculated daily on a tiered basis. This type of account is commonly known as a "Daily Interest Chequing" Account. Lines of Credit (LOC) or Overdrafts utilized, which are recorded on the credit union's books as chequing accounts with debit balances, must be added back to this Line and included in the appropriate Loan classification on Lines 1150 to Please note that all Personal Overdrafts are to be included on Line 1200, LOANS AND LEASES: Personal Unsecured: All, and all Commercial Overdrafts are to be included on Line 1280, LOANS AND LEASES: Commercial Unsecured: All Others. Do not include Overdrafts with any LOC classification. In addition, the outstanding balance of manager's cheques written on the Central 1 Credit Union Operating Account is not included here. Please refer to the earlier description of Lines 1020 and 2010 for proper treatment Demand: Savings - Regular Demand saving deposits where: a) interest is calculated daily, on an untiered basis, and there are no chequing privileges. This type of account is commonly known as a "Daily Interest Savings" or "Plan 24" Account. Page 20

24 b) interest is calculated monthly, based on a minimum (i.e., monthly, quarterly, semi-annual, etc.) dollar balance. Interest is applied on an untiered basis and there are no chequing privileges. This type of account is commonly known as a "Minimum Balance Savings" or "Special Savings" Account Demand: Savings High Interest Savings Demand saving deposits where interest is calculated daily, on a tiered basis, similar to "Daily Interest Chequing" Accounts, but at higher interest rates applied on higher tiered levels. This type of account is commonly known as a High Interest Savings Account Demand: Registered Plans All demand Registered Plans which receive a variable rate of interest including Registered Retirements Savings Plans (RRSP's), Registered Retirement Income Funds (RRIF's), Registered Education Savings Plans (RESP's), Tax-Free Savings Accounts (TFSA s), and other Registered Plans Demand: Other All other demand deposit accounts not included on Lines 2060 to Reminder: Dormant and U.S. dollar accounts are not included here. U.S. dollar chequing accounts ($CDN equivalent) must be included in the appropriate chequing account, Line Chequing. Other U.S. dollar savings accounts ($CDN equivalent) must be included in the appropriate savings accounts, Lines 2080 to Term: Redeemable Redeemable term deposits, including regular interest rate, premium interest rate, and special bid interest rate term deposits Term: Non-redeemable Non-redeemable term deposits, including regular interest rate, premium interest rate, and special bid interest rate term deposits Term: Registered Plans All term Registered Plans which receive a fixed rate of interest, including Registered Retirement Savings Plans (RRSP's), Registered Retirement Income Funds (RRIF's), Registered Education Savings Plans (RESP's), Tax-Free Savings Accounts (TFSA s), and other Registered Plans Term: Other All other term deposits not included on Lines 2130, 2137 and Non-Equity Shares All active non-equity shares. Also, include any endowment shares. Page 21

25 Reminder: Dormant non-equity shares must be included on Line 2187, OTHER LIABILITIES: Dormant Deposits Accrued Interest on Deposits & Dividends on Non-Equity Shares Accrued interest on deposits and dividends on non-equity shares included on Lines 2060 to Include any accruals for dividends on equity shares that are payable in cash or as a credit to a non-equity share or other deposit account. If the credit union intends to pay a dividend on non-equity shares at year end, the accrual must be set up monthly or the financial margin will be incorrectly stated. If the expected rate of dividend changes during the year then the accrued dividend can be adjusted at that time. Reminder: Accruals for non-equity shares, that are payable in the form of equity shares, must be reported on the appropriate Lines in the CAPITAL section - Primary Capital: Dividends to be Paid as Primary Capital (Line 2270) or Secondary Capital: Dividends to be Paid as Secondary Capital (Line 2300) DEPOSITS Accruals for Patronage Refunds that are payable in cash, as a credit to a loan, or to a non-equity share or other deposit account must be reported on Line 2188, OTHER LIABILITIES: Other. Accruals for Patronage Refunds that will be paid in the form of equity shares must be reported on the appropriate Lines in the CAPITAL section - Primary Capital: Dividends to be Paid as Primary Capital (Line 2270) or Secondary Capital: Dividends to be Paid as Secondary Capital (Line 2300). The sum of Lines 2060 to OTHER LIABILITIES 2186 Derivative Financial Instruments Includes unrealized losses (gains are to be offset against losses only as permitted by IFRS), deferred unrealized gains relating to reserves for credit and market risks and administration costs etc., accruals for derivative contracts which result in a net payable, deferred gains on hedging instruments, and premiums received. Reminder: Accruals for derivative contracts (i.e., swaps) which result in a net receivable must be included on Line 1407, OTHER ASSETS: Derivative Financial Instruments. According to IAS 32: Financial Instruments: Presentation: A financial asset and a financial liability shall be offset and the net amount presented in the statement of financial position when, and only when, an entity: (a) currently has a legally enforceable right to set off the recognised amounts; and Page 22